Nonprofit Market Analysis

Barbara Spagnola - Thursday, August 07, 2014

I recently attended a lecture series at Oxford University and one presenter, Dr. Richard Schoenberg, illustrated why some organizations succeed while others fail to harness the essence of customer satisfaction. His concept could be applied to any ongoing concern and quickly depicts gaps between products/services offered and actual consumer behavior. Several months later I came across another body of research that dealt with similar issues, but the model and approach differed. Dr. Clayton Christensen (Harvard Business School) proposed his theory which unveiled the difference between innovative verses a sustaining business model and the process of emergent verses deliberate strategies. A myriad of other relevant concepts from accomplished authors were also applied to this article to complete the discussion. This meta-analysis (culmination of works) illuminates and discusses the essentials of several academic theories and compares/contrasts them to an archetypal, nonprofit organization. The assumption is that nonprofits utilize flat organizations and their budgetary constraints limit access to consultants who can acquire and apply such concepts. Furthermore, fulfilling their daily charge affords little time to reflect on strategic shifts in their value segment. This brief alerts senior management to contemplate these theories and to assess applicability to their own organizational design. The following steps will help the organization’s management apply these concepts to their own business.

Step1: Defining Business Model Type Organizations tend to define WHO they are and WHAT they do based on the task at hand. For example, if you knit sweaters for the homeless, one might consider themselves clothiers and their goal is to clothe those in need. Another way to evaluate our example is based on disciplines and methods that constitute a business model. To continue with our example, if one were to make the highest quality sweater, then they would be considered “best product” and the organizational attributes would be structured around that process (The Discipline of Market Leaders, Michael Treacy & Fred Wiersema). If you highly customize your sweaters, you would be considered “customer intimate” and if your organization was highly efficient at that process, you would be deemed “operationally excellent.” According to Treacy & Wiersema, all organizations operate in all three arenas simultaneously, but the entity is organized around one dominate process. By stepping back and considering these two strategic issues, mainly WHAT you do and HOW you do it, you can quickly identify your business model type. This determination, in my opinion, is critical when undertaking a value-gap analysis. 

Step 2: Value-Gap Analysis The framework of a value-gap analysis is comprised of two constituencies: identification of gaps in consumer value that are not being fulfilled and re-defining the competitive rules. Let’s look at an organization that most are familiar with – the airline industry. Back in the 1980’s, Southwest Airlines found a gap (low-cost, no frills travel) in the airline industry and built a business model around that unfulfilled need. Management understood that competing head-to-head (using their rules) of the other giant airlines meant certain disaster. Southwest Airlines, in effect, changed the rules and was rewarded with market dominance and monetary prosperity during tumultuous times. Southwest built a low-cost business model by employing point-to-point service; one aircraft type (Boeing 737) which reduced maintenance costs and cross-functionally trained all their employees to engage in multiple activities. A value gap analysis consists of plotting your direct competitors on at least seven key attributes they consistently deliver. Next, by observing behavior or through surveys, have your target audience rate each attribute in terms of importance. The variance between competitive offerings and customer behavior will readily emerge. By reducing, eliminating, or increasing those attributes, a new position will be created that more accurately suits the behavior of your targeted audience. This exercise not only identifies opportunities, but reduces or eliminates activities that consumers do not value and in turn, reduces associated costs. If we apply this theory to the Southwest example (see graph), one can quickly assimilate attributes of importance to the discount traveler and by filling those needs, how a successful business might be developed. As the graph indicates, customers felt that food and comfort, which airlines were offering, possessed little value when compared to on-time flights and a fun experience. As a result, Southwest eliminated meals, minimized seating, but focused on frequency of on-time flights and created a “fun” experience from check-in to the destination arrival. To summarize, Dr. Richard Schoenberg suggests mapping the behavior of your target audience and find “gaps” that are being ignored or underdeveloped. Next, adjust your business model to eliminate, reduce, or increase value in areas that are meaningful to the user. Finally, change the rules of the game and make them hard to follow. 

Step 3: Sustaining verses Disruptive Business Another approach to assessing the marketplace for your organization considers circumstances over generally accepted quantitative tools/methods for creating growth. Let’s start with how the organization categorizes its business. According to Christensen, people “hire” products to do specific “jobs” in everyday matters (The Innovator’s Solution, Christensen). Most professional organizations utilize market research personnel or firms to quantitatively analyze the “numbers” and derive correlations between attributes and customers. Christensen suggests that “the functional, emotional, and social dimensions of the jobs that customers need to get done constitute the circumstances in which they buy.” The critical point here is segmenting your business around circumstances verses customers determines your success. Returning to the Southwest example, the circumstances of discount and business flyers warranted a demand for inexpensive, high frequency, and fun travel. The Southwest business model embodied functional (frequency/inexpensive), emotional (fun/relaxing), and social (light-hearted service, whimsical) with every experience. In short, Southwest segmented their business along the circumstances of travel and not the customer and has built a 20 year history of success. Christensen asserts three approaches to creating growth; sustaining, low-end disruptions, and new market disruptions. What is the importance of these concepts to nonprofits or any other organization? The unequivocal answer is all organizations need to grow! By now, you have discerned WHO and WHAT your organization does and if the dominate process entails best offering, customer intimacy, or organizational competence. Next, you have undertaken a value-gap analysis and determined gaps and shifting the rules of competition. Also, you’ve considered the circumstances to WHY people buy and how they hire products/services to achieve them. The next step involves how you are going to create growth. A sustaining approach seeks to continuously improve the offering and initiate cost containment. A second approach is deemed a low-end disruption (ex. Southwest A/L) that delivers “good-enough” performance at affordable prices. The final, or new market disruption, competes against non-competition. (The depth and complexity of this topic could not be contained in this article and the author recommends reading Christensen’s book.) The importance of which growth strategy you select solidifies the direction and actions you’ll take. If your organization continuously improves its methods to deliver a service while clamping down on costs, the path taken equates to a sustaining strategy which increasingly adds more performance to capture growth. If the increasing capability exceeds what customer’s desire (over-shoot needs), the possibility exists for a segment of donors to seek other venues. An example might be a grass-roots organization that, over time, has taken on too many causes in an effort to grow. In this case, donors might feel the message has been diluted and will find another cause to support which is more centered.

Step 4: Deliberate verses Emergent Strategies A final theory posed by Christensen culminates WHAT you do and HOW you do it in relation to the marketplace and your organization on the whole. He suggests that two simultaneous processes operate in every organization that defines strategy. A “deliberate” strategy is derived by analysis, is measurable, and is implemented by senior management. An “emergent strategy” is derived from unanticipated opportunities and is a process of daily decisions of the organization. Let’s go back to our sweater business example. You make two sweaters – one out of cotton and the other wool. Your strategic direction is to donate the more durable sweaters next year, but the organization receives requests for the cheaper cotton sweaters. Thus, the organization allocates resources to invest in cotton material and the net result is the organization’s actual strategy. Here lies the critical point – do you adapt emergent opportunities/problems or force a deliberate strategy on your organization?

Summary The intent of this meta-analysis was to introduce several market analysis theories and then generate reflection on the part of nonprofit management. Nonprofits stretch their resources to accomplish the task at hand without having to consider “competitive forces” which are lurking around the corner. Since time, money, and energy are limited commodities, the ability to think strategically about your organization’s direction is more critical than ever. Undertaking a marketplace analysis achieves two strategic objectives: it identifies WHAT you do and HOW you do it with respect to the current circumstances of your donor base. A value-gap analysis quickly discerns those attributes which are important and those to increase, reduce, or completely eliminate. Defining if you are attempting to sustain your current activities or create new value will determine a future direction. Finally, will you follow the emergent opportunities or drive deliberate strategies to initiate growth. These questions will not only define your organization’s future, but re-organize how you serve your existing constituents.


About the Author

Bill Nissim consults with nonprofit organizations on brand management issues.

Nonprofit Marketing: Follow the Yellow Brick Road?

Barbara Spagnola - Thursday, August 07, 2014

When the topic of “marketing” arises in a conversation, it’s always interesting to hear the numerous perceptions tied to this rather straightforward concept. The full spectrum of responses includes advertising, word-of-mouth, fluff, and my personal favorite – selling something you don’t need! I believe the problem with understanding marketing lies in the over-commercialization of the term and leaves business acumen, strategy, and execution at the front door. 

According to the American Marketing Association, marketing is defined as “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” Sounds simple enough? If accountants follow Generally Accepted Accounting Principles (GAAP) and manufacturing managers utilize FIFO or LIFO for inventory valuation, then why does the practice of marketing not follow a similar process? Good question!

The following brief is intended to be reflective in nature and prompt senior management to evaluate specific facets of their approach to nonprofit marketing. The analogy of Dorothy’s journey down the yellow brick road mirrors common flaws in marketing application and practice within the nonprofit arena.

All organizations have a goal or objective they want to attain. In the process of reaching that goal, they need “donors” (financial supporters) who hear the message and want to be part of that journey. Organizations then apply traditional marketing methods to reach those targeted donors. Sound familiar? Dorothy, in that age-old storybook tale, had the same dilemma. To reach Emerald City and have an audience with The Wizard (to find a way home), she consulted the munchkins and mindlessly followed the yellow brick road. 

Marketing Plan The basic problem with Dorothy’s plan, as with some organizations, was the methodology she applied. Most plans seek traditional promotional venues to solve their immediate dilemma. If the goal is to increase donor gifts by 10%, most managers rush to main-stream mediums (radio, billboard, newsletters, and telemarketing) as a solution. What sounds good on paper may not actually work in practice. This unidirectional approach, sometimes called insider mentality, delivers a stream of messages from the organization to the targeted audience with little regard for their current circumstances. Without this understanding, the channel proposed may not be suitable for the intended audience. 

By starting with the donor (outside-in) and their behavioral circumstances, you will effectively gain their attention, mind, and heart. If Dorothy had asked the good witch the right question (early on), she would have known to click her heels three times and instantly returned to Kansas. When generating a marketing plan, start with your donor base and work your way back to the organization. This exercise will unveil the most direct and meaningful approach to achieving your objective. You might save yourself time, energy, and valuable resources in the process! How do you approach your donor base? If they are truly integral to your cause, understanding what’s important to them will help shape your marketing plan. (“Do better at doing good” HBR, May 1996)

Value Proposition A value proposition accomplishes two strategic objectives: Defines what your organization can do better than anyone else and secondly, why that’s important to the donor. If your mission/vision statement is not clear on that point, how can the rest of your organization and donor base feel the same way? In the Land of Oz, the Wizard had a very clear and powerful value proposition despite the fact that he couldn’t deliver on his promises. Al Ries, noted marketing expert, said it best – “perceptions, not products” (or services). This critical point of contention is often over-looked, or in the planning process, is written once and then set aside. The entire organization must be compelled by this “rallying cry” and live the brand promise each day! (The Brand Mindset, Knapp) The key to defining a value proposition is an arduous task and requires time, patience, and tenacity on the part of management. One organization I researched had a lingering problem – the perception didn’t match what they actually did. Although their mission, philosophy, and business plans reflected one set of attributes, the brand perception unveiled in donor surveys revealed a very different perception. Does your collateral material mirror what you do? Try this exercise. Approach two or more of your senior managers and ask them, in one sentence, to define your value proposition (what you do better and why that’s important). If you get an array of divergent responses, it’s time to re-align your mission statement and then infuse those beliefs into the organization.

Marketing Public Relations The most widely ignored marketing tool available to all organizations is public relations (Value-added Public Relations, Harris). Great companies like Starbucks and The Body Shop were built on public relations and only used advertising later on to support/update their message. The Wicked Witch of the East made personal appearances throughout the story to ingrain her message into the frightened travelers. The Witch’s compelling message was looming and ubiquitous. Is your organization’s message compelling and meaningful? Most nonprofits utilize volunteers or “friends” who can acquire an occasional story in the local paper or regional magazine. You can follow the yellow brick road and stick with traditional media or target the places where your targeted donor’s work/play. The shear number of free placements in highly segmented forums is astounding. Internet portals that deal with your nonprofit issues are numerous and seek a continuous stream of input to support their site. Other than the obvious regional and local papers, a variety of more niche publications will gladly give you space to tout your message. If scarce monetary resources are one of nonprofit’s toughest dilemmas, let marketing public relations provide a venue to achieve your goal at minimal expense. Also, third party editorials (PR), according to Theodore Levitt of Harvard Business School, are the most credible messages (Marketing Imagination, Levitt).

Messaging Dorothy had an unmistakable message throughout her journey – I want to go home! Every action she took and anyone who would lend an ear heard her specific cause. What is yours? Every aspect of your messaging, both visual and intangible, should specifically point to that mantra. When you think of Overnight Package Delivery, does Fed Ex come to mind? The Ultimate Driving Machine? Does BMW sound familiar? How about Just Do It? Try Nike. The human mind can only attach one specific meaning or feeling to each item. Although a brand represents a culmination of all attributes, we really only remember one distinct thing. Let’s start with your logo and by-line (sometimes called tag line). A by-line should be both emotional and descriptive (Marketing Aesthetics, Schmitt/Simonson). Going back to our BMW example, “ultimate” is an emotional aspect and “driving machine” is the descriptive. Does your by-line capture the essence of your value proposition? Does it instantly tell the potential donor who you are and what your purpose is? The by-product of your messaging should generate passion and action. Dorothy convinced the scarecrow, tin man, and cowardly lion to journey to Oz based on a value proposition (brand promise). Most messages are directed at attributes and correlate cause to effect. This approach lacks inspiration and polarizes the recipient. Does your message invoke passion and action? Simply put, every message you produce (business cards, newsletters, website, etc.) culminates into a single, brand position. Each additional layer of messages you generate are either acknowledged or disregarded by the donor based on your original pronouncement. Be mindful of the context and character your organization delivers. Is your message as clear and compelling as Dorothy’s? 

About the Author

Bill Nissim consults with nonprofit organizations on brand management issues.

Marketing for Non-profit Organizations

Barbara Spagnola - Thursday, August 07, 2014

In a crowded marketplace of ideas, it is important for non-profit organizations to establish a well-defined niche. While most non-profits are not selling products, they are selling their organization's mission, their ideas, their programs, and their services. In a world where everyone is inundated with information, a strong image is the key to community awareness. Developing and maintaining a visible and credible identity through marketing will increase local support for your organization.

Many non-profit organizations believe their programs will sell themselves based on their inherent worth. They operate with the assumption that support and recognition will automatically come to a good cause. Unfortunately, this is a false premise. Even the best of programs will fade into obscurity unless non-profit management intentionally makes other groups, associations, businesses, and individuals aware of their mission and continuously maintains that level of awareness. Communication builds understanding and advocates change. Non-profits should define their intended audiences, target their messages to these groups, and outline strategic plans that will best use limited resources to meet organizational goals and objectives.

How many people in your community are alert to the good work of your organization? Effective communication and a consistent image also enhance the ability of non-profit organizations to raise money. If local community members do not have an awareness of the good work that a non-profit does, it is unlikely that they will contribute to a fund raising campaign. In turn, if private foundations do not see financial support at the local level, they may be less inclined to award grants. Foundations also look at grant proposals to see how an organization plans to communicate the results of their program. Marketing is an on-going, cumulative strategy that can build financial partnerships.

Regardless of an organization's size or mission, here are some essential elements of successful marketing that will work to build community awareness and support:

1. Identify your target audiences: Define the groups that your organization wants to reach.

2. Maintain consistent communication: Plan your communications strategy for the next year. Develop a timeline for press releases, newsletters, special events, and other marketing efforts.

3. Create a visual identity: Communicate visually as well as verbally. Frequently display your organization's name and logo on newsletters, reports, signs, and brochures. A memorable, well-designed visual image will strengthen awareness of your organization.

4. Use message repetition and variation: An audience is more likely to remember a message if is reiterated in different types of communication. For example, print your mission statement in a brochure, write it in a PSA, and tell it to a news reporter. Slogans are a way to effectively capture the essence of a message in brief and memorable form.

5. Employ multiple communications tactics: Nonprofit organizations often target several audiences, which may respond to different approaches. Various communications campaigns can help establish and maintain a more widespread positive image.

6. Select and use appropriate media: Plan to use a combination of approaches best suited to reaching your targeted audiences and that make best use of your financial resources. Include a variety of methods including phone calls, letters, e-mail, newsletters, PSAs, press releases, and editorials.

7. Develop a strong, well-known identity over time: Building visibility and awareness is a gradual process. Be patient, persistent, and consistent.


About the Author

Wendy Gray Maynard is the co-owner of Kinesis. Kinesis specializes in marketing, graphic design, and business writing. Visit www.kinesisinc.com for more articles and free marketing wisdom.